Chancellor announces the scrapping of the controversial bill in his Pre-Budget Report

The Chancellor Alistair Darling has announced that the government is ditching the planning gain supplement (PGS) in his Pre-Budget Report today.

The decision about the controversial levy, under which increases in land value will be taxed after planning permission is granted, comes after months of lobbying by the industry.

In July the prime minister Gordon Brown said he wanted to look at alternatives to the PGS bill, which included:

鈥� A lower-rate PGS coupled with higher section 106 obligations. Under this option, while all PGS revenue would be returned to the region it was raised in, the government would rethink proposals to hand back 70% to the relevant local authority

鈥� The PGS to be levied only on greenfield sites, which see the biggest rise in values

鈥� Replace the existing system of individually negotiated section 106 agreements with a standard planning charge 鈥� in effect a Milton Keynes-style 鈥渞oof tax鈥�

鈥� Legislation to introduce a standard planning charge. This would be similar to the previous option, but by placing the charge on a firmer legislative footing, it would be possible to apply it to a wider spectrum of small-scale developments.

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